Last week I had lunch with Marty Schiff­man who told me that “If I live 1,000 years, I will never under­stand that account­ing rule! It’s dis­hon­est!” Marty was, of course, talk­ing about the appli­ca­tion of mark to mar­ket account­ing rules by major finan­cial insti­tu­tions. Marty Schiff­man is not the “aver­age” man on the street; he […] [read full story]

Some of the head­lines from last week’s Fed­eral Reserve con­fer­ence sounded like they were writ­ten in the 1930’s when the Hoover Admin­is­tra­tion encour­aged liq­ui­da­tion of assets and banks as a way to fix the econ­omy. Willem Buiter, a for­mer offi­cial of the Bank of Eng­land and Euro­pean Bank for Recon­struc­tion and Devel­op­ment, sounded like Andrew […] [read full story]

Money Sup­ply For the week end­ing August 11TH, money sup­ply grew by $7.0 bil­lion to $7,728.1 bil­lion (as mea­sured by M2 on a sea­son­ally adjusted basis). Since the week end­ing March 24th sea­son­ally adjusted M2 has only increased by approx­i­mately 0.35% which means that M2 con­tin­ues to grow at a rate of less than 1% […] [read full story]

This morn­ing I was a guest on FOX Busi­ness Net­work. FOX pro­vided a car and dri­ver to take me to the stu­dio. The dri­ver imme­di­ately started quizzing me on what I was going to talk about on tele­vi­sion. When I told him I would dis­cuss bank­ing and pub­lic mar­kets and that I am a for­mer […] [read full story]

For the week end­ing August 4th, money sup­ply shrank to $7,720.7 bil­lion (as mea­sured by M2 on a sea­son­ally adjusted basis) which was approx­i­mately a $9 bil­lion decline in money sup­ply. Since the week end­ing March 24th sea­son­ally adjusted M2 has only increased by approx­i­mately 0.25% which means that it is grow­ing at a rate […] [read full story]

25 years ago Mil­ton Fried­man was an eco­nomic Yoda teach­ing that money sup­ply was an ever present “Force” con­trol­ling the econ­omy. With a new finan­cial Death Star threat­en­ing, Fried­man is remem­bered by the Fed­eral Reserve’ Jedi Knights of money sup­ply. Before his death, Mas­ter Fried­man was the “mon­e­tarists” leader. He taught that money sup­ply deter­mines […] [read full story]

It was a year ago that I appeared on CNBC and was inter­viewed by Maria Bar­tiroma. I dis­cussed the state of the bank­ing and credit mar­kets and the future direc­tion the U.S. econ­omy. After the inter­view I received e-mails and tele­phone calls telling me I was crazy and needed to “get real” about the future. […] [read full story]

Brian Mairs of the British Bankers’ Asso­ci­a­tion (the “BBA”) appears to have responded to my recent blog arti­cle about LIBOR by post­ing a com­ment. I can­not con­firm that the posted com­ment was writ­ten by Mr. Mairs, but based upon blog track­ing soft­ware I believe that the com­ment was posted by some­one at the BBA and […] [read full story]

I am a critic of LIBOR’s use as a US bench­mark inter­est rate. With more than $350 tril­lion of out­stand­ing LIBOR indexed debt, a small error in LIBOR has a mas­sive dis­tort­ing effect on col­lec­tive bor­rower inter­est expense. US bor­row­ers are being over­charged because LIBOR over­states what it is intended to mea­sure. LIBOR has two […] [read full story]

Many “econ­o­mists” spent the last 9 months scream­ing that the Fed­eral Reserve’s inter­est rate pol­icy was going to ignite run­away infla­tion. These talk­ing heads were so inter­ested in lis­ten­ing to them­selves that they for­got to check the data and see whether Fed­eral Reserve pol­icy was infla­tion­ary or not. As it turns out, since the mid­dle of […] [read full story]